Universal dental care for Australians

Australians will have access to universal dental health care under reforms suggested by a federal government health commission.

The commonwealth will take over responsibility for all primary health care outside of hospitals and fund all outpatient services in hospitals.

The National Health and Hospitals Reform Commission has stopped short of calling for a full federal takeover of hospitals, but left open the option of the commonwealth funding 100 per cent of hospital admissions further down the track.

The annual cost of the reforms is estimated to be between $2.8 and $5.7 billion.

In addition, capital investment over five years of up to $7.3 billion is needed.

But the report says the changes could save $4 billion a year by 2032-33.

Of the 123 recommendations, one that could be most welcomed is the suggestion that commonwealth fund a new Denticare Australia.

The commission’s final report, released publicly on Monday, says there are more than 650,000 people currently on public dental waiting lists and the dental health of children is worsening.

‘To address these problems we are recommending a new universal scheme for access to basic dental services – Denticare Australia,’ the report says.

It will cost an estimated $3.6 billion a year. Under the scheme every Australian will have access to basic dental services ‘regardless of people’s ability to pay’.

It will be funded through an increase in the Medicare levy of 0.75 per cent of an individual’s taxable income.

source  :  www.bigpondnews.com

Advertisement

Read Full Post »

Superannuation on the rebound

SUPERANNUATION balances have recovered about $70 billion in the past few months as the share market continues to gain ground.     

The average growth fund is believed to have jumped another 1 per cent in May, adding $10 billion to balances.

This takes the recovery since February to about 7 per cent, or $70 billion.

According to independent research house Chant West, despite recent improvement, the average growth fund is still forecast to lose 13 per cent for the financial year.

Chant West investment research analyst Mano Mohankumar said yesterday results were still being held back by the share market and an continuing fall in unlisted assets, expected to show up to a 25 per cent loss for the year to June.

A separate survey released yesterday showed the downturn has put retirement plans of hundreds of thousands of Australians in doubt

Every second retiree or soon-to-be retiree had lost up to $50,000 in the past year from retirement savings or investment portfolios. About one in three had lost up to $100,000, it said.

The Bankwest survey, Retiring in the Downturn, said retirement plans of 74 per cent of older Australians had been disrupted.

“While younger Australians have years to recover, many retirees have little chance to recover lost wealth,” Bankwest’s Ian Corfield said.

Source  :   www.news.com.au

Read Full Post »

ATO warns SMSFs to keep deals at arm’s length

The Australian Tax Office has issued a warning to self-managed super funds (SMSFs) about people offering to set up agreements between funds and related parties to purchase assets, particularly properties.

Tax Commissioner Michael D’Ascenzo says he’s concerned some of the arrangements on offer breach the in-house asset rules.

“These arrangements use a paid third party to set up an agreement, sometimes referred to as ‘a joint venture agreement’, between the fund and a related trust to purchase an asset that provides income for the trust and the fund,” D’Ascenzo says.

“This is clearly an attempt to circumvent the in-house asset rules as the transaction is really an investment by the SMSF in the related trust.”

“This alert serves as a timely reminder to trustees that we’re looking closely at SMSFs to ensure they’re meeting their obligations in relation to loans, in-house assets, borrowings and non-arm’s length transactions.”

The Taxpayer Alert (2009/16) on this issue is available from the Tax Office website at www.ato.gov.au/atp.

Source  :  www.apimagazine.com.au

Read Full Post »

What is superannuation?

Superannuation is a way of saving for your retirement. Both you and your employer can make contributions that accumulate over time and this money is then invested in shares, government bonds, property, or other appropriate investments.                                 

On retirement, or after disability or death you then receive the money (less charges and taxes) as regular periodic payments (ie, a pension), a lump sum payment, or a combination of both.

Employers must contribute to an employee’s superannuation fund. This is called the Superannuation Guarantee, which came into operation on July 1, 1992.

The amount of the contribution is 9 per cent of an employee’s wages (excluding overtime, leave loading and fringe benefits).

Some employees are left out. The Superannuation Guarantee (Administration) Act says that employers do not have to pay the Superannuation Guarantee in certain circumstances.

Some of the exceptions are:
• employees earning less than $450 per month;
• employees under the age of 18 who work 30 hours per week or less;
• employees over 70 years of age;
• anyone paid to do domestic or private work for 30 hours per week or less.

Can the employer pay more?

An employer can make payments above the compulsory superannuation guarantee as:
• a reward for a worker’s performance;
• a type of co-payment, where the employer’s contribution increases in line with the employees voluntary contribution; or
• a ‘salary-sacrifice’ – this is where the employer makes a contribution that would otherwise be paid as salary.

Note, there are limits to the amount of salary sacrifice that can be made in a financial year.

If you want your employer to pay more, you should get advice from a financial advisor, but keep in mind that employers are limited in the amount that can be claimed as a deduction for superannuation contributions made for a particular employee.

Check with your superannuation fund or the Australian Tax Office to find out what these limits are – they change each year.  www.ato.gov.au

Should I contribute too?

If you have money left over after your weekly expenses, and you want to save for the future, you may want to consider making superannuation contributions as compared to other forms of investment.

Note, there are aged base limits that affect whether or not you can contribute to superannuation – for details, see the Australian Taxation Office web site.

Some of the advantages are:
• generally, you pay less tax on interest from superannuation savings than bank interest;
• with a ‘salary sacrifice’ the superannuation contribution is taken straight out of your wages, so you are not tempted to use it for purposes other than savings.

There are limits to the amount that you can “salary sacrifice”;
• the interest on superannuation savings is ‘compounded’, that is, interest earned by the superannuation fund is added to the total investment, so the interest earns more interest.

The Australian Prudential Regulation Authority estimates that a sum of money ‘compounded’ at 7 per cent a year will double in value in ten years; and
• you may be able to access the benefits of the low income super rebate and low income spouse rebate.
• you may be able to access financial incentives offered by the Government such as the co-contribution scheme. Under this scheme Government will contribute up to $1500 (depending on your income) when you contribute to your fund.

Check the Australian Taxation Office web site for details.

Ultimately, the pros and cons of contributing to superannuation is something you should get advice about.

What are the tax advantages?

The maximum tax rate for your employer’s contribution is 15 per cent.

The income you earn through the fund’s investments is also taxed at a maximum 15 per cent rate.

Salary sacrifice contributions will be taxed at 15 per cent.

Once you reach 60 you can withdraw your superannuation as a lump sum or income stream tax free.

There are also tax advantages if you contribute to your spouse/de facto’s super fund. The set off depends on their income. Check the Tax Office for details.

What laws apply?

The main laws that apply to superannuation are the:
• Superannuation Industry (Supervision) Act and Regulations (regulates most private superannuation funds);
• Superannuation Guarantee (Administration) Act and Regulations (tells employers the minimum contribution they must pay);
• Income Tax Assessment Act,.

The jargon

Accumulation funds – money is invested and the final benefit depends on the total contributions, plus earnings of the fund.

Annuity – like a pension. You receive regular periodic payments for either fixed amount of time or until you die.

Benefit – the money paid to you out of the superannuation fund or held on your behalf within the fund.

Contribution – the money paid into the superannuation fund by either you or your employer.

Defined benefit funds – the final benefit is paid on the basis of a specific formula, so the employer carries the risk if the growth of the fund does not cover the benefit.

Lump sum – money received in a single payment.

Preserved – money that you cannot withdraw from your fund until retirement or certain other events, eg reaching a certain age and leaving employment either temporarily or permanently. This includes money paid by your employer, interest earned on that money or contributions paid by a self-employed person which have been claimed as a tax deduction and any undeducted contributions you make after 1 July, 1999.

Rollover – transferring money from one fund to another.

Unrestricted or non- preserved amount – money that can be paid to you at any time form your superannuation fund

Rights to information

You are entitled to certain information from your superannuation fund. This includes:
• a member statement which shows the amount of your benefit at the start and end of the relevant period, the amount that is preserved and contact details (generally provided annually);
• a fund report which shows the fund’s financial position (generally provided annually);
• notification of changes that affect you, e.g. a change to the superannuation fund’s rules; and
• a statement that shows your benefit, including death benefits when you leave.

Source  :  www.news.com.au

Read Full Post »

See through the rebate debate health insurance

The strategy :  To work out how the changes to the health insurance rebate affect me.

I suppose it means I’ll be paying more for my health insurance. That’s the gist of it though it will depend on whether Opposition leader Malcolm Turnbull delivers on his threat to block the legislation. As you may have picked up from the federal budget, the Government needs to find savings to fund higher pension payments.

One proposed measure is means testing the health insurance rebate, which currently allows you to claim a tax rebate of 30 per cent of the cost of your health insurance if you’re aged under 65, 35per cent if you’re 65 to 69 and 40 per cent if you’re 70 or older.

Most people ask their health fund to reduce their premiums to take account of the rebate rather than paying the full premium and claiming the rebate in their tax return. For someone under 65, a monthly insurance premium of $250 could be reduced to $175. That won’t change if you earn up to $75,000 if you’re single and $150,000 for families. But if your income is higher, your rebate will be reduced or cut out altogether.

How will that work? Let’s look at singles first. If you earn $75,001-$90,000, your rebate will be reduced to 20 per cent. If you earn $90,001-$120,000, the new rebate will be 10 per cent.

Once your income exceeds $120,000 you will be ineligible for the rebate.

For families, the combined income limits are $150,001-$180,000 for the 20per cent rebate, $180,001-$240,000 for the 10 per cent rebate and the rebate will disappear altogether once family income exceeds $240,000.

All income thresholds will be indexed to wages and will be adjusted for families with one child in the same way that thresholds are already adjusted for determining whether you have to pay the Medicare levy surcharge if you don’t have private health cover. The threshold is currently lifted by $1500 for each dependent child.

The Government says the definition of your income for the rebate will be the same as for the Medicare levy surcharge. Challenger’s head of technical services, Alex Denham, says this definition is changing from July 1 to include your taxable income, reportable fringe benefits, salary sacrificed to super or any personal deductible super contributions made and net investment losses. So higher-income earners won’t be able to use strategies such as salary sacrifice to get or increase their rebate.

Would I be better off dropping my health insurance and paying the Medicare levy surcharge? The proposed measures also include a rise in this surcharge precisely to stop this sort of behaviour.

The 1 per cent surcharge will rise to 1.25per cent once income exceeds $90,000 for singles or $180,000 for couples and to 1.5 per cent for incomes exceeding $120,000 or $240,000. That extra tax may cancel out any savings from dropping your health cover.

MLC’s head of technical services, Andrew Lawless, says a better option may be to make changes to your policy, such as increasing the excess you pay before claiming on the cover or reducing cover on ancillary benefits. However, to avoid the surcharge you must have hospital cover with an excess of $500 or less for singles or $1000 or less for families or couples per calendar year.

When will the changes come in? Not until July 1 next year, so you have time to check the final details if the measures are passed and weigh up your options.

It’s worth noting that the Medicare levy surcharge income limits will be indexed from their current levels of $70,000 for singles and $140,000 for couples to the new $75,000 and $150,000 levels at this time.

Source : www.watoday.com.au

Read Full Post »